Hedge fund investors are growing more concerned over slower economic growth in the year ahead, which could be prompting a noted shift toward global macro managed futures strategies, according to the results of a survey published today by BarclayHedge, now a division of Backstop Solutions, and Markov Processes International (MPI).
The BarclayHedge, MPI Hedge Fund Investor Survey collected responses from 116 institutional hedge fund investors and fund of hedge fund managers about their thoughts on how the broader economic environment would impact hedge fund investing in 2019. Responses were collected between 2 November and 27 November.
According to the survey, concern about slower global growth is on the rise. More than one third (38 per cent) of respondents listed slower growth as the biggest risk in 2019, a significant jump from March, when 12 per cent of respondents listed it as the top risk. Two other top investor concerns for 2019 are rising interest rates (29 per cent) and a stock market reversal (21 per cent).
Those concerns could be driving a shift in investor interest toward global macro managed futures and fixed income and away from equity strategies in 2019. One in four survey respondents (27 per cent) believe the global macro managed futures sector will see the most interest in the next 12 months, up from 22 per cent last year.
Interest in fixed-income strategies (17 per cent) showed a notable 15-percentage-point jump from 2 per cent last year. That shift could be driven by a reduced interest in equity-based strategies, which saw an 8-percentage-point drop (21 per cent) from 29 per cent last year.
“Growing interest in global macro managed futures strategies makes sense in light of the weakened commodity sector,” says Sol Waksman, president of the Backstop BarclayHedge division. “That could create opportunities for investors to cash in on a commodity bounce in 2019.”
Nearly half of our respondents (48 per cent) think low-correlation will be the hedge fund characteristic that delivers the highest investor value in 2019. Around a quarter, by contrast, give the nod to diversification (26 per cent) and high risk-adjusted returns (25 per cent).
“Equity market performance in December underscored the reality that the longest-running bull market in history could be nearing its end,” says Rohtas Handa (pictured), EVP, Head of Institutional Solutions at MPI. “More than anything, I believe that sentiment is driving survey results, which at a very high level can be viewed as a shift toward both passive and active strategies that are not correlated to equity markets.”
